S&P, States Decline Settlement Talks in Ratings CasesDavid McLaughlin
McGraw Hill Financial Inc.’s Standard & Poor’s unit and states suing the ratings company won’t try to settle the litigation at this point, lawyers for both sides said.
S&P and a lawyer for a group of state attorneys general were asked about the possibility of settlement discussions by U.S. District Judge Jesse Furman at a hearing today in Manhattan federal court. The states claim S&P misrepresented that its credit ratings on mortgage securities were independent and objective.
Floyd Abrams, an attorney for New York-based S&P, said it isn’t the “best time right now” to hold talks.
The U.S. Justice Department and the states sued S&P in February over credit ratings on mortgage securities. Cases filed by 14 states and the District of Columbia have been consolidated in federal court in Manhattan. Furman set an Oct. 4 hearing to consider the states’ request to send the cases back to state courts. Lawsuits filed by California, Illinois and Connecticut are pending in those states.
S&P and the U.S. failed to reach a settlement before the government sued, and the company “does not believe further discussions would be fruitful at this time,” Abrams told the judge in a June 28 letter. He declined to comment after the hearing today.
Olha N.M. Rybakoff, an attorney for the Tennessee attorney general’s office and the lead lawyer for the states, said in an interview after the hearing that both sides will be in a “better position to revisit settlement” after a decision on whether the cases will remain in federal court.
The parties would be “remiss if they didn’t make a good-faith effort to discuss settlement,” she said.
The case is In re Standard & Poor’s Rating Agency Litigation, 13-md-2446, U.S. District Court, Southern District of New York (Manhattan).